Reference no: EM132510531

The management of Firebolt Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department factory overhead rate method.

The following factory overhead was budgeted for Firebolt:

Fabrication Department Factory Overhead $577,200

Assembly Department Factory Overhead $235,200.00

Total                                                  $ 812,400.00

Direct Labor hours were estimated as follows

Fabrication department 5,200 (hours)

Assembly Department $4,000

Total $10,100 (hours)

In addition, the direct labor hours (DLH) used to produce a unit of each product in each department were determined from engineering records, as follows

Production Departments                 Gasoline engine               Diesel Engine

Fabrication Department                        2.8dlh                            1.9dlh

Assembly Department                            1.9                               2.8

Director Labor hour per unit                    4.7dlh                           4.7dlh

Question a. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the single plantwide factory overhead rate method, using direct labor hours as the activity base . If required, round all per-direct labor hours and per-unit answers to the nearest cent.

Question b. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for each department. If required, round all per-unit answers to the nearest cent.